Born at Canterbury Hospital in Campsie, a suburb in South-Western Sydney on 2 June 1965, Waugh was one of twin boys born to Rodger and Beverley Waugh. He arrived four minutes before Mark. His father was a bank official and his mother was a teacher within the New South Wales Department of Education. The family settled in the western Sydney suburb of Panania. The twins were later joined by two more brothers, Dean and Danny. From an early age, the parents introduced their children to sport. By the age of six, the twins were playing organised soccer, tennis and cricket. In their first cricket match, the brothers were both dismissed for ducks.

Waugh made his first-class debut for New South Wales (NSW) in 1984–85, batting at number nine and bowling medium pace. In the Sheffield Shield final that season, he scored 71 while batting with the tail to help NSW to victory. After ten first-class matches for NSW, he made his Test debut against India in the 1985–86 season, in the Second Test at Melbourne. He scored 13 and 5 and took 2/36 in the first innings. Failing to make a substantial score in the series (he tallied 26 runs in four innings), Waugh was retained for the subsequent tour of New Zealand. He had a good all-round match in the Second Test at Christchurch, making 74 and claiming 4/56, but his batting average was only 17.40 for the series, scoring 86 runs. Waugh had more success in the one-day format during the season. He made his debut against New Zealand at the MCG and took 1/13 and a catch. He did not bat as the match was washed out. He was retained for all of Australia’s 12 matches in the triangular tournament, scoring 266 runs at 38.00 with two half-centuries, including a top score of 81 in the Australia Day victory over India. He took seven wickets at 33.00. Waugh was retained for all four ODIs on the tour of New Zealand, scoring 111 runs at 27.75 and taking four wickets at 39.75.

The 1987 World Cup, played on the Indian subcontinent, was the turning point of Waugh’s career. Having scored 19* in the death overs against India in the first match, Waugh’s tight bowling in the closing overs finished with his dismissal of Maninder Singh in the final over, which secured a one-run victory. In the following match against Zimbabwe, Waugh scored 45 before conceding only seven runs in six overs of bowling as the Australians won by 96 runs. In the following match against New Zealand, Waugh bowled the last over with the Kiwis requiring seven runs for victory: he restricted them to only three runs by taking three wickets in the over. He ended with 2/36, as one of the last over wickets was a run out.

However, Waugh continued to be inconsistent in Test matches. He made only 194 runs at 32.33 in five Tests in 1987–88 against the touring New Zealand, England and Sri Lanka teams. His bowling helped to keep him in the team, with nine wickets at 29.67. Waugh’s ODI form remained strong, playing in all of Australia’s 11 ODIs for the season, scoring 226 runs at 32.29 and taking 18 wickets at 23.50. He scored one half-century and took a haul of 4/33 in one match against Sri Lanka.

He suffered a form slump during the 1990–91 Ashes series in Australia, and was dropped for the Fourth Test at Adelaide after making only 82 runs at 20.50.[33] He was replaced by his twin Mark, who scored a century on debut.

However, Waugh remained a regular in the ODI team, playing in all ten ODIs, scoring 141 runs at 35.25 and taking seven wickets at 49.42.

Recalled for the Third Test in Trinidad during the 1991 tour of the Caribbean, he and Mark became the first twins to play in a Test match together. However, he failed to post a significant score and was dropped for the Fifth Test, Australia’s only win for the series.

Waugh remained out of the Test team for eighteen months and did not see action in the five-day format in 1991–92 season. Nevertheless, Waugh played in all 18 ODIs for the season.

Returning to Australia, he solidified his position by scoring an unbeaten 147 against New Zealand in an innings victory in the Third Test at Brisbane, ending the series with 216 runs once dismissed. He missed part of the 1993–94 triangular ODI tournament with New Zealand and South Africa due to a hamstring injury in late December, as well as the first two Tests against the South Africans. He returned for the end of the ODIs and ended with 141 runs at 23.50 and taking four wickets at 54.50. Waugh played in the Third Test at Adelaide Oval in late January with Australia trailing 1–0.[47] He scored a 160 and took 4/26 as Australia won the Test and levelled the series.[33] He was named as the international player of the [Australian] season.

Waugh took over the captaincy of the one-day side in 1997–98, after captain Mark Taylor and vice-captain Ian Healy, the two oldest players in the team were dropped following Australia’s failure to qualify for the Australian tri-nations tournament in the 1996–97 season. Planning began for a more modern team for the 1999 Cricket World Cup, with new wicket-keeper Adam Gilchrist chosen primarily on his batting skill in response to the use of Romesh Kaluwitharana by the successful 1996 Sri Lankan team.

Steve Waugh captained the Australian Test cricket team from 1999 to 2004. He is the most capped Test player in history with 168 appearances. He is known amongst friends as "Tugga" (as in tug of war), and amongst the public as "Iceman" for his ability to remain calm and cool in high-pressure situations throughout his career. He is known for his philanthropic work, and he was named Australian of the Year in 2004.

On 30 September 2009, Steve Waugh was one of five new members inducted into the ICC Cricket Hall of Fame.